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The benefits of a secured credit card include low fees and the opportunity to rebuild your credit no matter how bad it might be. The best secured cards have no annual fee and will accept people with credit scores in the 300-640 range, along with applicants who have no credit score at all. Secured cards also report account information to the major credit bureaus on a monthly basis and appear no different on credit reports than unsecured cards.
There are also some benefits that might initially seem like drawbacks. For example, having to place a security deposit is not ideal. Neither is being unable to spend more than the amount of that deposit before making a payment. But these two features do benefit cardholders by helping them avoid interest rates and by making it impossible to spend more than you can afford to repay. Plus, a secured card’s deposit is fully refundable when you close the account and bring the balance to zero.
8 Benefits of Secured Credit Cards:
- Credit building potential: If you use your card responsibly, you can establish good credit or rebuild your credit standing after past troubles. Secured cards report to the credit bureaus just like unsecured cards do.
- Easier approval: Secured credit cards are available to people with bad credit or no credit history. Some secured cards don’t even check applicants’ credit history.
- Low/no annual fees: Secured cards have fairly low fees because the refundable security deposit they require helps the issuer avoid losing money. Many of the best secured credit cards even have $0 annual fees.
- Credit card-only transactions: You can use a secured card in situations where other payment methods (e.g. cash) may be limited. For example, if you’re planning to book a hotel or rent a car, you will need a credit card to secure the reservation.
- Rewards: Earn cash back, points, or miles on every purchase with select secured rewards cards.
- $0 fraud liability: No major credit card issuer will hold you liable for fraudulent purchases on your account. That’s true with all credit cards, not just secured cards.
- Car rental insurance: Certain credit cards also cover you for theft and physical damage when you charge the car rental to your card.
- Roadside assistance: Certain secured cards give cardholders access to a free 24-hour phone line that dispatches help with jump starts, towing, gas, tire changes, and more. Just note that repair charges from the service provider automatically get billed to your card.
Just keep in mind that it’s important to use a secured card responsibly in order to take advantage of its benefits. That means paying the bill on time (and preferably in full) every month and staying well within your credit limit. This behavior will help you build a good credit score. And you’ll eventually qualify for an unsecured card with no deposit, a higher credit limit, better benefits, and more favorable terms.
Despite all the advantages of a secured card, there are some drawbacks. For example, you won’t have access to the cash you deposit until you close the account and pay the balance in full. Plus, if you have a pending bankruptcy or tax lien on your credit report, there’s no guarantee you’ll even be approved.

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